Major Changes In Proposed Standard
According to FASB-IASB's joint press release:
If adopted, the proposal would create a single revenue recognition standard for International Financial Reporting Standards (IFRSs) and US generally accepted accounting principles (GAAP) that would be applied across various industries and capital markets. The publication of this joint proposal represents a significant step forward toward global convergence in one of the most important and pervasive areas in financial reporting. The proposed standard would replace IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations. In US GAAP, it would supersede most of the guidance on revenue recognition in Topic 605 of the FASB Accounting Standards Codification.Public Comments Due in October; Roundtables Coming In November
The core principle of the draft standard is that an entity should recognise revenue from contracts with customers when it transfers goods or services to the customer in the amount of consideration the entity receives, or expects to receive, from the customer.
The proposed standard would improve both IFRSs and US GAAP by:
- removing inconsistencies in existing requirements;
- providing a more robust framework for addressing revenue recognition issues;
- improving comparability across companies, industries and capital markets;
- requiring enhanced disclosure; and
- clarifying the accounting for contract costs.
According to FASB's homepage, public roundtables on the ED will be held on Nov. 5 and 8, 2010.
Links To Additional information
Additional information on what is informally referred to as the "Rev Rec" ED can be found in:
- FASB/IASB Joint press release
- FASB in Focus
- Podcast featuring FASB Board Member Leslie Seidman speaking on the Rev Rec ED
- Investor outreach for comments
- FASB's Rev Rec Project Page
Print this post